Today the front month 30yr straddle settled at 1-17, 11 ticks lower from where it opened and a % vol of less than 7, around 6.80 or something like that. This is pretty much at an all-time low, and the scary thing is that paper sold about 4,000 of these straddles today. A couple of us were talking on the close. First of all, whoever is buying these straddles and vol in general for the past year or so has been getting smoked. Especially on a day like today, where the straddle decayed 11 ticks, and there is no way these option locals are making that back scalping futures (not with a 12 tick range). So, with the Fed at a turning point, possible fallout of the housing market, enormous supply on the horizon, maybe Chinese dollar-asset diversification, the list goes on. Why is absolutely no one worried? And there is no worry showing down the road, back month vol in the 30yr is only at 7%. The question is: who has been buying vol (maybe some type of bank desk) for the past year, why haven't they blown up? On the other hand, who is short so much vol that they stand to blow apart if one day vol explodes and opens at 12%? Lets speculate doomsday scenarios, always fun.